Digital principles

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The Russian Federal Antimonopoly Service (‘FAS’) has identified key principles of good faith conduct for participants in online platforms. It is assumed that a platform will mitigate antitrust risks by following these principles. What is this soft-touch regulation tool based on and how is it going to be used?

The global economy is progressively taking the digital route. This is the effect of online platforms developing rapidly and often creating entire ecosystems to enhance their position on the market.

There is ongoing discussion in Russia and abroad as to whether it is necessary and expedient to codify the rules governing the business of such platforms and ecosystems. The stumbling block is how to preserve the platform’s motivation for development while also protecting competition and consumer interests, along with the interests of the state and the public?

Back in 2019 the FAS pointed out the importance of developing competition law, as the tools that were used for governing and controlling the markets of tangible products were inapplicable to the digital sphere.
The discussion around the fifth antitrust package of amendments to Federal Law No. 135-FZ “On the protection of competition” dated 26 July 2006 (the ‘Competition Law’) and the Code of Administrative Offences is still ongoing.

In 2021 the discussion in Russia stepped up about possible approaches to the regulation of ecosystems and online platforms. The Ministry of Economic Development has developed and published the draft General Regulation Concept for the business of groups of companies that are developing digital services based on a single ecosystem. The Bank of Russia has presented for public consultation its report titled ‘Ecosystems: Regulatory Approaches’.

Moreover, on 22 September the FAS of Russia’s Expert Council for Developing Competition in Information Technologies approved the Interaction Principles for Digital Market Participants (the ‘Principles’). These Principles reflect multiple suggestions that legal entities and public organisations have sent to the state authority.

The basic interaction principles for online platform participants are as follows:
  • the platform should be reasonably open;
  • it should be neutral in relation to different market participants (including competitors);
  • users should be independent when interacting with the platform;
  • the platform’s operating rules must not contain wording that is too broad or ambiguous;
  • users’ rights must be secured, including in terms of their applications being examined and such users being provided with exhaustive answers.
These principles have been developed based on the FAS’s previous case studies, as well as foreign practice with account being taken of current offences that have been identified. For instance, the current independence principle has been formulated based on the results of antitrust cases involving Booking and Alibaba that limited their users’ independence.

The principles have been developed to ensure that digital markets remain transparent and open, and that rights and interests of all market participants are protected, including the rights of consumers, suppliers and online platform owners. There is a principle of conduct for every type of risk, and one needs to follow this principle to mitigate the corresponding risk or rule it out altogether.

No sanctions have been established for a failure to comply with the Principles. It is assumed that actions contradicting such principles may cause a negative reaction of good faith companies. This reaction does not rule out an audit being held by regulator of the relevant participant’s business in terms of its compliance with the Competition Law.

The Principles do not set out any additional obligations; they only describe reasonable and good faith conduct of digital platforms.

We note that activities to improve regulation have not ceased since the Principles were developed. The FAS of Russia is planning to make lists of good faith and bad faith practices in the digital environment and determine which are admissible and which are not.

The antimonopoly service and other authorities do not stop looking for the most suitable and effective tools for regulating the digital sphere and soon we are going to see what these are.

Source: Competition and Law

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